The Government’s Sugar Divestment Team (SDT) is to finalise a deal soon with China’s COMPLANT International Sugar Industry Company, for the sale of its three remaining sugar factories – Frome, Monymusk and Bernard Lodge – following Monday’s (July 12) green light from the Cabinet.
Minister of Agriculture and Fisheries, Hon. Dr. Christopher Tufton updates the House of Representatives yesterday (July 13) on the divestment of the Frome, Monymusk, and Bernard Lodge Sugar Estates.
Minister of Agriculture and Fisheries, Dr. Christopher Tufton, told the House of Representatives Tuesday, July 13 that COMPLANT will acquire the three factories and their lands, for US$9 million (J$774 million). COMPLANT will also lease some 18,000 hectares of cane lands for US$35 (J$3,010) per hectare per annum for a period of 50 years, renewable for another 25 years.
“In essence, therefore, the country stands to gain revenue of $828.6 million in the first year of the agreement and $54.6 million per annum thereafter from lease agreements,” Dr. Tufton summarised in an update on the divestment process.
The Government previously owned five sugar factories under the management of the Sugar Company of Jamaica (SCJ)- Bernard Lodge, St. Catherine; Frome, Westmoreland; Monymusk, Clarendon; St. Thomas Sugar in Duckensfield St. Thomas; and Trelawny Sugar in Long Pond Trelawny. However, in June 2009, the two smaller factories – St. Thomas and Trelawny – to local investors, for $500,000 and $1.5 million, respectively, with conditions to invest in their expansion and modernisation.
The sale followed huge losses accumulated by the SCJ since the Government bought the factories in 1998, amounting to over $18 billion. A decision taken in 2004 by the previous Government to sell off the factories, had failed to materialise until now.
After the most recent bid from Italian company, Eridania Suisse fell through in December, the Cabinet authorised the reopening of the divestment process in January. Four entities submitted detailed proposals by the July 2 deadline: COMPLANT International Sugar Industry Company Limited (China); Energen Development Limited (USA/Jamaica); Everglades Farms Limited (Jamaica); and, Integrated Agriculture and Energy, LLC (USA/Jamaica).
Dr. Tufton said that the proposals were evaluated on the basis of: sound development plan and sustainability; managerial expertise and track record; identified markets; and transparent, variable and credible source of funds to finance business plans. “I am pleased to advise this Honourable House that, upon evaluation of the four (4) proposals by the Sugar Divestment Team (SDT), the Board of the SCJ Holdings recommended for Cabinet’s approval, the proposal from COMPLANT International Sugar Industry Company of China”, he told the House.
“The Cabinet yesterday (July 12) approved the said recommendation of the Board of the SCJ Holdings Limited. With this approval, the SDT is now authorised and mandated to negotiate and finalise specific agreements with COMPLANT, related to the proposal to acquire Frome, Monymusk and Bernard Lodge,” he stated. He pointed out that they include sales agreement, lease and other pertinent agreements, and that it is Government’s expectation that concrete agreements will be “speedily and successfully” negotiated.
He added that COMPLANT will develop these assets in two phases. In Phase One, they commit to spend US$126.8 million or J$11 billion immediately and continuing over a three-year period, to rehabilitate the fields on the three estates and the Frome and Monymusk factories.
In Phase two, they propose to build a sugar refinery in Jamaica, contingent on the results of a feasibility study they will undertake, which is to be completed by next May.
The plan is for a 200,000 tonnes refinery capacity, to primarily satisfy the Jamaican and regional demands, and possibly the European Union.
“Mr. Speaker, if the feasibility studies are favourable, then COMPLANT will invest US$180 Million or J$15.5 billion to construct the refinery,” Dr. Tufton said.
COMPLANT also proposes to acquire additional lands for cane expansion, in order to increase throughput to the factories. In tandem with this, they propose to work closely with local cane farmers, providing them with the necessary support to increase production and productivity, and ensure continued supplies to their factories.
He said that an interesting aspect of COMPLANT’s plan is the use of cassava to produce ethanol in Jamaica.
COMPLANT is associated with a state-of-the-art cassava-based ethanol facility in Southern China, for which China has secured a number of patents. They also operate similar plants in some 12 countries in Africa.
This aspect of the plan will open up possibilities for the expansion of commercial cassava production in Jamaica, by local farmers on substantial areas of non sugar lands, including mined out bauxite lands.